Working Capital Loan vs Business Cash Advance

I felt like revisiting Working Capital today – and wanted to compare a Working Capital Loan to a Business Cash Advance. 

Working Capital Loans

Working capital loans provide small businesses with the possibility of rapid growth by allowing them to meet their short-term financial needs.  Working capital loans are generally used to pay wages, clear up accounts payable, and other short-term obligations. Working capital loans generally reach maturity within one year – some of these loans require collateral, although others do not.  However, lenders DO check your credit history and DO require that you have ability to repay the loan on a fixed schedule.

Business Cash Advance

Business cash advances can also provide cash for working capital in a small business, without the credit check, and without the need to “repay” – This is because the business cash advance is not a loan.  Payments are settled against the clients’ monthly credit card sales receipts.  An added bonus that many credit card factoring companies offer is more efficient and cost-effective credit card processing.

Whichever financing method you choose – never underestimate the importance of keeping your working capital working.

see also… Working Capital Loans: Getting working capital for your business

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